Endowment-holders who are considering selling their policy to raise money may find it more difficult to obtain a good price, in another example of the fall-out from the plunging stock markets.

With several leading insurers cutting payouts on maturing endowment policies, and worries about future returns exacerbated by the events on September 11, the companies specialising in purchasing unwanted policies and selling them on are becoming a lot more choosy about what they buy, it was claimed this week.

It's a reminder that unless you are really desperate for the cash, you should hold on to your policy until it matures.

Growing numbers of people have been considering ditching their endowments because they are worried they will not grow sufficiently to pay off the mortgage. Partly as a result of this, the past few months have seen an increase in the number of unwanted endowments available to buy.

If you are thinking about cashing in your endowment policy early, you may not be aware that you will usually be able to get more money by selling it on to a traded endowment policy (Tep) specialist - also known as a market maker - than by surrendering it to your life insurer. The Tep companies then resell these to other investors, who often like them because many of the costs and expenses have already been paid by the previous investor.

Tep specialist firms reckon that around 50,000-60,000 people surrender their endowment back to the life insurer each year when they could have got an average of 10%-15% more by selling it - and in some cases a lot more than this. As the average policy sold is worth £10,000, that means people are typically missing out on £1,000 to £1,500.

But the stock market turmoil has taken its toll. Many of the biggest insurers have cut bonuses. Legal & General and Friends Provident are among those that have slashed payouts to people with maturing endowments and other with-profits policies in recent months.

Ilford-based independent financial adviser Baronworth says that as a result of all this, some people selling their endowments may find the market makers are not able to improve on the surrender value being offered by their insurer. Baronworth operates a "trawling" service, which means it will approach more than a dozen of the Tep specialists on behalf of people wanting to sell their endowments, to get them to quote on what they would be willing to pay.

"We are finding the market makers are now quoting on fewer policies - they are being much more selective. In the vast majority of cases they are not able to beat the surrender values," says Colin Jackson at the company. One of the reasons for this is that some of the Tep specialist firms have a large number of policies on their books at the moment, he adds.

Baronworth's advice to people is that unless they are "desperate" for the cash, they shouldn't ditch their policy. If they are keen to sell but can't seem to obtain a decent price, they might be best advised to hang on for a little while in the hope that things improve.

However, the Tep specialists insist the picture is rosier than this, and say you can still often get considerably more by selling rather than surrendering. Brian Goldstein at Policy Portfolio says demand among investors for second-hand endowment policies is still growing, with policies maturing in 2002-2008 most in favour among buyers. However, he adds there is no question that over the last year or so, the supply of policies has gradually been increasing.

Beale Dobie, another market maker, says: "We have seen a lot of interest from investors generally."

You should only consider getting rid of your endowment if you really can't afford to keep it going and you need the cash now.

There are a number of alternatives to selling and surrendering.

You can make the policy "paid up" - this means you stop paying the premiums and your policy is frozen until maturity, when you receive benefits based on the premiums paid.

If you are short of cash you may be able to borrow against the policy from your insurer or from a bank using the policy as security, says Tep specialist company Neville James.

Generally speaking, for it to be of interest to investors, your policy needs to be a with-profits endowment or whole-of-life, must have been running for at least five years and have a surrender value of at least £1,500-£2,000.

Before you do anything you should get an up-to-date surrender quote from your provider. Then either contact a "trawling" company such as Baronworth or the Endowment Exchange, or contact market maker trade body, the Association of Policy Market Makers (tel: 020-7739-3949), which has eight member firms; all of them are specialists in this field.

The APMM will forward details of your policy to three of its members, who will then offer quotes. This service is free and you are under no obligation to accept an offer.